Which real estate investing path? 1, 2 or 3?

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Which real estate investing path? 1, 2 or 3?

Jared Smith

Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes

Do you recommend...

1. continuing to grow slowly by acquiring 1-2 properties each year.

2. start paying off properties.

3. go all in buying 1 property per month?

1 Reply

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Stone Jin

Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes

Originally posted by @Jared Smith:

Do you recommend...

1. continuing to grow slowly by acquiring 1-2 properties each year.

2. start paying off properties.

3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.

Good to see another OHIO and ARIZONA investor.

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Matt Lowry
Member since 2020 · 5 posts · 4 votes
6y
Originally posted by @Filipe Pereira:
This is sort of impossible to answer because it's so situational.

In my situation I am going the route of 1. continuing to grow slowly by acquiring 1-2 properties each year.
My goal is to have 1 million worth of paid for real estate by 35. My plan is to buy about 1 mil of real estate by 30, then spend 30 to 35 paying off the mortgages from the cashflow that is generated off the rentals.

Of course that's subject to change. For example - if we continue to have rates in the low 3s when I'm in my early 30s, I don't think I'll be paying down those mortgages. Seems a bit foolish, because rates won't be this low forever.

Hey Filipe, I like this! Great plan! That is similar to what my path has been without the plan in place. I have been busy running a construction company, and always worried about running out of lots. So I always reinvested in unimproved lots without even considering my self a real estate investor. I just wanted to have a future in my construction business. Due to appreciation, and always paying for lots with cash, time has been on my side. Over the last few years, I finally started my rental portfolio. Imagine if I would have started with the knowledge that you have, of what can happen over 10 years, and actually had a plan in place. Your plan has the appreciation that I reaped large benefits from, as well as income through cash flow. So, great plan! It makes perfect sense to me.

2 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Joseph Cacciapaglia:
Originally posted by @Jared Smith:
Originally posted by @Joseph Cacciapaglia:
If your biggest issue is financing, because of your DTI, why not move up to larger multifamily? Once you're buying 5+ unit properties, the underwriting changes, and your W2 income becomes much less important. Lenders will look more at the property and to your net worth, liquidity, and track record.
Joseph, that is a good point! I have specialized in SFH and Small MFH 2-4 plexes. That is where I have all of my experience, knowledge and expertise. I am starting to dive deeper into larger MFH, but don't want to bite off more than I can chew. Also I am self managing 10 units so I like to deal with Class A & B Tenants that require minimal headaches and I always make sure all properties cap/ex etc is top notch which also helps.
How did you get started in MFH 5 units and larger?

Early in my career I worked as an acquisitions analyst for a large multifamily REIT, and then later I worked on the financing side of commercial real estate. That's where I developed my basic understanding of the asset class. I bought my first 10 unit property several years ago with 2 partners. I put the deal together, and then brought them in for both equity financing and to run the management side. I always like to bring in more experienced and better capitalized partners when I'm stretching. I don't have a large portfolio of my own, as I had to liquidate almost all my properties when I was sick and out of work for several years (I didn't have even close to enough to live off of the cash flow yet). I've really only been back at it for a year and a half. At the moment, I spend a lot more time working as a buyer's agent for multifamily investors than I do investing on my own account.

Joseph, the comeback is always stronger than the set back! Good to hear you are back in the swing of things. If you ever come across any useful knowledge please send it my way! Great way to learn - I have been self managing for +8 years and have been successful at property management. A lot of people have asked me about doing so in AZ - I'm eligible to get my Broker's license in November at my 3 yr mark for being a Realtor so that is something else I will continue to learn and progress with. I might work for a commercial property manager PT to learn the software and large scale best practices. Best of luck to you!

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @John Morgan:
@Jared Smith
Option 1

Thanks John -Looks like you are doing very well from Texas! Where are you getting your financing after you reach 10 SFH's?

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Ian Walsh:
Figure out your end goal and work backwards.

Ian, reverse engineering is great! Do you work with west coast investors or lend locally? Current strategy is to buy and hold long term and grow at a speed that is within my wheel house. Ideally 20k/month in passive income in locations that I know very well (Cleveland, AZ, OIB-NC and San Diego) and will not go beyond my area of expertise at this point.

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Rich Weese:
@John Morgan

Do you really live in Grand Prairie, Texas? I actually currently own 128 units in that fair city! It was supposed to close several weeks ago and fell through at the end.

@Jared Smith
Here is a new thought on your choices:
Buy one home a day for 30 days and speed up the process. I actually accepted a challenge approximately 10 years ago to try and buy one home a day for 30 days. I came close! I relocated to southern Texas for the effort. Great state to buy real estate!

Rich, that is definitely more than the 10x rule! I am self aware enough that I am not at that level yet but I am confident I will be able to later on. It has been an enjoyable journey so far and looking forward to the next few decades of REI. Please let me know if you are private money investor as well or have a trustworthy contact in AZ - Thanks!

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Alan Crookham:
@Jared Smith personally I have been doing the slow acquisitions, number 1. I am a big believer in not over extending and putting myself at unnecessary risk. However, like others here have said, once there is a really solid foundation in place and you have a strong structure, teams, finances, etc..., you could definitely ramp it up.

Alan, spot on thinking at this current point in my REI journey. Working on streamlining my processes now. I am bullish on the AZ Market, but I can navigate Cleveland very well as I grew up there. The entry point is much lower and my team is much stronger there - #LongDistanceLandlording

1 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
6y
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
@Jared Smith
Option 1

Thanks John -Looks like you are doing very well from Texas! Where are you getting your financing after you reach 10 SFH's?

I’m stopping at 10 SFRs. Closing on my 10th property next week. Ten was my goal and ten are enough to manage on my own.

1 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Stone Jin:
Originally posted by @Jared Smith:
Do you recommend...
1. continuing to grow slowly by acquiring 1-2 properties each year.
2. start paying off properties.
3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.
Good to see another OHIO and ARIZONA investor.

Stone - Very small world! Let's definitely connect. I used to work in Toledo and Chandler is about 20 minutes from me in Scottsdale. That is great to hear! What does your rental portfolio look like? I am in the same camp as you but also realize the opportunity cost and the ability to acquire more properties. I am a big believer in buying more and never selling!

0 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
Originally posted by @Stone Jin:
Originally posted by @Jared Smith:
Do you recommend...
1. continuing to grow slowly by acquiring 1-2 properties each year.
2. start paying off properties.
3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.
Good to see another OHIO and ARIZONA investor.

How many doors are you at now?
[email protected]614-541-8475 Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
Reafco512 Reviews
Website View Page
1 Reply
Stone Jin
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
6y
@Jared Smith We have condos, sm MF and SFR

@Remington Lyman More than I have fingers and toes.
1 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
@Jared Smith personally, I would build the portfolio as quickly as you can. Things go wrong in real estate just like with any investment class. If you have just one or two properties and something goes wrong ie. vacancy, HVAC replacement etc, you'll feel the pinch a lot more than you would if you have other properties in your portfolio offsetting an under performing one.
2 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Thanks. No. I only lend in PA, NJ, MD,DC and DE.

Originally posted by @Jared Smith:
Originally posted by @Ian Walsh:
Figure out your end goal and work backwards.

Ian, reverse engineering is great! Do you work with west coast investors or lend locally? Current strategy is to buy and hold long term and grow at a speed that is within my wheel house. Ideally 20k/month in passive income in locations that I know very well (Cleveland, AZ, OIB-NC and San Diego) and will not go beyond my area of expertise at this point.

1 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @John Morgan:
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
@Jared Smith
Option 1

Thanks John -Looks like you are doing very well from Texas! Where are you getting your financing after you reach 10 SFH's?

I’m stopping at 10 SFRs. Closing on my 10th property next week. Ten was my goal and ten are enough to manage on my own.

John, Congrats and that is awesome news! Do you work a full time job as well and do you mind if I ask what the cash flow number is? Or what your goal was with 10 properties? I appreciate it as I have a general path and goal/timeline but want to get more granular and specific.

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Remington Lyman:
Originally posted by @Stone Jin:
Originally posted by @Jared Smith:
Do you recommend...
1. continuing to grow slowly by acquiring 1-2 properties each year.
2. start paying off properties.
3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.
Good to see another OHIO and ARIZONA investor.

How many doors are you at now?

Remington, I am currently managing 10 units. What about you and what are your REI Goals?
1 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
Originally posted by @Jared Smith:
Originally posted by @Remington Lyman:
Originally posted by @Stone Jin:
Originally posted by @Jared Smith:
Do you recommend...
1. continuing to grow slowly by acquiring 1-2 properties each year.
2. start paying off properties.
3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.
Good to see another OHIO and ARIZONA investor.

How many doors are you at now?

Remington, I am currently managing 10 units. What about you and what are your REI Goals?

I am at more than 20 doors. I want to learn more about the industry and continue to refine my skills. I am trying to surround myself with experienced people and soak up as much knowledge as possible.
Eventually, I would like to live off of my passive income.
[email protected]614-541-8475 Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
Reafco512 Reviews
Website View Page
1 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
6y
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
@Jared Smith
Option 1

Thanks John -Looks like you are doing very well from Texas! Where are you getting your financing after you reach 10 SFH's?

I’m stopping at 10 SFRs. Closing on my 10th property next week. Ten was my goal and ten are enough to manage on my own.

John, Congrats and that is awesome news! Do you work a full time job as well and do you mind if I ask what the cash flow number is? Or what your goal was with 10 properties? I appreciate it as I have a general path and goal/timeline but want to get more granular and specific.

My cash flow now from my 10 SFRs is 4k/month..not counting vacancies or cap ex. They’re all on 15 year loans. My goal is to cash flow 12k/month when they’re paid off. I have a W2 job that I love and have 15 years until retirement. So I’m not depending on any of my rental income.

I got into real estate 5 years ago and wanted something to diversify my portfolio a bit vs having all my retirement and 401k investments in the stock market I’m loving real estate so far and actually enjoy self managing my properties. Good luck!

1 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Mike D'Arrigo:
@Jared Smith personally, I would build the portfolio as quickly as you can. Things go wrong in real estate just like with any investment class. If you have just one or two properties and something goes wrong ie. vacancy, HVAC replacement etc, you'll feel the pinch a lot more than you would if you have other properties in your portfolio offsetting an under performing one.

Mike, that definitely makes sense. I felt the vacancies much more when I had fewer units but now can absorb costs a lot better. I was trucking along nicely until now with a couple Tenants in AZ which I am currently working through. I know this will eventually pass and make me a better REI, but learning through my first possible eviction. I guess I was due after 8 years!

0 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @Remington Lyman:
Originally posted by @Jared Smith:
Originally posted by @Remington Lyman:
Originally posted by @Stone Jin:
Originally posted by @Jared Smith:
Do you recommend...
1. continuing to grow slowly by acquiring 1-2 properties each year.
2. start paying off properties.
3. go all in buying 1 property per month?

We've been practicing 1 and 2 for the last 10 years and it's pretty amazing when you look back at the wealth that was created with a little luck, a little sweat and a little patience.
Good to see another OHIO and ARIZONA investor.

How many doors are you at now?

Remington, I am currently managing 10 units. What about you and what are your REI Goals?

I am at more than 20 doors. I want to learn more about the industry and continue to refine my skills. I am trying to surround myself with experienced people and soak up as much knowledge as possible.
Eventually, I would like to live off of my passive income.

That is a great plan - Good Luck!
1 Reply
Jared Smith
OP
Real Estate Broker · Scottsdale AZ & Cleveland, OH · Member since 2019 · 168 posts · 109 votes
6y
Originally posted by @John Morgan:
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
Originally posted by @Jared Smith:
Originally posted by @John Morgan:
@Jared Smith
Option 1

Thanks John -Looks like you are doing very well from Texas! Where are you getting your financing after you reach 10 SFH's?

I’m stopping at 10 SFRs. Closing on my 10th property next week. Ten was my goal and ten are enough to manage on my own.

John, Congrats and that is awesome news! Do you work a full time job as well and do you mind if I ask what the cash flow number is? Or what your goal was with 10 properties? I appreciate it as I have a general path and goal/timeline but want to get more granular and specific.

My cash flow now from my 10 SFRs is 4k/month..not counting vacancies or cap ex. They’re all on 15 year loans. My goal is to cash flow 12k/month when they’re paid off. I have a W2 job that I love and have 15 years until retirement. So I’m not depending on any of my rental income.

I got into real estate 5 years ago and wanted something to diversify my portfolio a bit vs having all my retirement and 401k investments in the stock market I’m loving real estate so far and actually enjoy self managing my properties. Good luck!

John, thank you very much and if you run into any helpful tips over the years please reach out! I am rethinking my strategy after Covid-19 passes with outsourcing property management if I continue to grow. I am currently at 10 units and working through 1 tenant turn and 1 possible eviction. I love your strategy and have a similar path and thought process - Good luck to you as well!

1 Reply
Rich Weese
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
6y
@John Morgan
I asked you in a previous email if you really live in Grand Prairie? I have an apartment building there and haven't visited in quite a while. I was curious as to what you think about the particular area where this is located if you really live in Grand Prairie. I know I had a few tenants that were there working on building new commercial structures.
Congrats on the cash flow from your SFR S. I remember when I started in real estate decades ago and had it planned out when each property was going to be paid off. It was a great strategy.
2 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
6y
@Rich Weese
Where is your apartment building located? Grand Prairie has been a hot real estate market the last few years. The city has revitalized and keeps improving. Lots of flips going on and major city improvements.
0 Reply
Rich Weese
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
6y
1933 South State Hwy. 161. !28 units known as Treetop. I had a buyer at $13 million back out one week before closing last month due to lenders changes on financing. Currently receiving LOI's in the 11's and have just countered back at 12+. Nice property that I have owned for approximately four years.
So, do you actually live in Grand Prairie?
0 Reply
Filipe Pereira
Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
6y
Originally posted by @Matt Lowry:
Originally posted by @Filipe Pereira:
This is sort of impossible to answer because it's so situational.

In my situation I am going the route of 1. continuing to grow slowly by acquiring 1-2 properties each year.
My goal is to have 1 million worth of paid for real estate by 35. My plan is to buy about 1 mil of real estate by 30, then spend 30 to 35 paying off the mortgages from the cashflow that is generated off the rentals.

Of course that's subject to change. For example - if we continue to have rates in the low 3s when I'm in my early 30s, I don't think I'll be paying down those mortgages. Seems a bit foolish, because rates won't be this low forever.

Hey Filipe, I like this! Great plan! That is similar to what my path has been without the plan in place. I have been busy running a construction company, and always worried about running out of lots. So I always reinvested in unimproved lots without even considering my self a real estate investor. I just wanted to have a future in my construction business. Due to appreciation, and always paying for lots with cash, time has been on my side. Over the last few years, I finally started my rental portfolio. Imagine if I would have started with the knowledge that you have, of what can happen over 10 years, and actually had a plan in place. Your plan has the appreciation that I reaped large benefits from, as well as income through cash flow. So, great plan! It makes perfect sense to me.

Thanks for your thoughts, Matt!

Before I transitioned to being a full time real estate agent / property manager, I worked as an architect in Boston (and later on in CT) - what I learned then was that construction is VERY cyclical so you better have plan B (and sometimes C!). Rental properties have afforded me that breathing room that you typically can't get working for someone else. Job security is kind of a myth if you ask me - it's only as secure as tomorrow's corporate financial report!

0 Reply
Salvatore Lentini
Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
6y
@Jared Smith - you need to work with lenders that will lend based on the property and not your W2 income. That's how I was able to grow my portfolio to 127 rentals in 5 years.

1 Reply
Jon KellyPro Member
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
6y
@Jared Smith - has to be option 1 or 3 and would go with option 3 as long as you are not breaking your financial analysis criteria (e.g. ROI, CoC return, monthly cash flow, etc). I'm not sure what option 2 gets you, other than maybe peace of mind, but what fun is that?
It sounds like you're off to a great start, keep it up!
1 Reply

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